Trichet "Strong Vigilance"

ECB kepts its interest rate unchanged at 3.5% and then we've a hawish tone from ECB President Trichet as he used the word "STRONG VIGILANCE" in his intro statement and this clearly signalling that ECB will hike the rate in its next meeting on March 08 to 3.75%. Even in his last month indicated that he'll comfortable with market expectation for a march rate hike. Still he is repeating that ECB Monetray Policy continues to be accomodative and that interest rate are still at LOW LEVEL And he said that recent indicator and some survey data are suggesting that economy expansion in E12 is strong and he said "to be remain strong". Also he statet that Germans VAT hike is still not fully reflected in CPI. Trichet said that inflation may slow in spring summer but is expected to accelerate again second part of 2007.

After the Trichet speaks and his word STRONG VIGILANCE did not bought a huge reaction in market as the EUR/USD firmly trading above 1.3010. Since the Trichet's hawkish tone EUR/USD gained a nearly 60 pips.